How to Switch Your Electricity and Gas Provider in Australia
Thanks to the deregulation of the electricity and gas market within certain parts of Australia, it’s easier than ever to switch your energy provider. If you haven’t shopped around and switched providers recently, you might be paying the dreaded “lazy tax”, paying more for your energy because any discounts or benefits on your previous energy plan have ended. Whether you’ve never switched providers before, or want to make the process easier this time around, continue reading to learn more about switching your energy provider in Australia.
Deregulation of Australian energy: The National Electricity Market
First beginning in 1998, the National Electricity Market (the NEM) is the complex network of physical and financial institutions that make up the electricity generation and distribution in Australia. The NEM spreads across Australia, covering New South Wales, South Australia, Queensland, the ACT, Victoria, and Tasmania with additional deregulation of natural gas in Western Australia.
With the creation of the NEM, and the deregulation of energy providers that resulted, competition within the electricity and gas markets in Australia increased tenfold.
Switch energy providers step one: Compare your options
The first step to switching is to compare energy providers. With over 39 active electricity retailers and over 19 natural gas retailers within the NEM, it can be difficult to know if you’re really choosing the right plan for your household.
To make the process easier, it helps if you have a copy of your electricity or gas bill to know exactly how much energy you use and how much you pay for it. Then, you can compare it to other providers to make sure you’re getting the best deal.
Choosing an energy retailer
Energy Providers in Australia are split into three categories: The Big Three, Tier 1, and Tier 2.
- The Big Three: The three largest energy providers in Australia; AGL, Origin Energy, and EnergyAustralia. These three providers make up the largest collective market share within the NEM, and have some of the biggest household name recognition in the country.
- Tier 1: Other large energy providers in the country, who individually make up at least 10% of the market share. These Tier 1 retailers include Simply Energy, Red Energy and Lumo (both owned by Snowy Hydro), and Alinta Energy.
- Tier 2: The rest of the energy retailers in Australia make up Tier 2. These are smaller retailers, which often do away with confusing discounts in exchange for simple plans with low rates. Tier 2 retailers include green providers like Powershop, wholeshare retailers like Powerclub, and local community-driven providers like DC Power Co.
Types of energy discounts
When choosing an energy provider, you’ll often see “X% off the reference price” in the energy plan details. This is how much of a discount you’ll receive when you switch to this plan, compared to the government-set reference price (also known as the Default Market Offer or Victorian Default Offer). The reference price is often used as a cap for energy prices in Australia, and energy providers are legally obligated to tell you how much less (or more, in some cases) their plan is when compared to the reference price.
Discounts and benefits fall into a few different categories:
|Type of benefit||Description of benefit|
|Low rates||The base rate for your daily supply charge and price per kWh of usage are low, without any confusing discounts. These rates can be fixed, meaning they won’t change for a certain amount of time (usually 12 months) or they can be variable, meaning the company can change the prices whenever they want (usually once a year).|
|Conditional discounts||Discounts off your energy bill that have a condition attached to them. Usually, the conditions involve paying on time or using direct debit. If you know you can meet these conditions, these are generally a good deal.|
|Unconditional discounts||Instead of low, fixed rates, you simply get a percentage discount off your total energy bill.|
|Other offers||Offers in addition to, or instead of, other discounts. Other offers that an energy retailer might include in your plan can be points for certain membership programmes, e-gift cards, or a credit off your energy bill every 6 or 12 months.|
|Wholesale pricing||Certain energy retailers, like Powerclub or Energy Locals, sell electricity at wholesale prices to residential customers. Instead of paying more in supply and usage rates, customers pay a membership fee which grants them access to these wholesale rates.|
More and more energy providers are making the switch to environmentally friendly and community-based initiatives, giving customers the opportunity to make a difference with their energy consumption. Whether this is through higher feed-in-tariffs for solar panel users like Diamond Energy, 100% renewable energy generation like Powershop, or community-centered providers like Enova Energy, making a conscious decision to choose an environmentally-friendly energy retailer doesn’t need to be complicated or expensive.
Different energy tariffs
Depending on the type of meter you have, you might be able to choose which type of tariff you want your electricity plan to be on. Not every type of tariff is available within every energy distribution network, so make sure to discuss with your energy provider what is available for you.
|Flat or single rate tariff||Also known as the standard, peak-only,, or anytime tariff. This tariff is available to all customers, and charges people the same amount for their electricity usage no matter when that electricity is used. Rates are usually lower than peak rates for a time-of-use tariff, but higher than off-peak rates, and could be a good choice if you’re home and using most of your electricity during weekday evenings.|
|Block tariff||This is often the tariff type used for natural gas plans, in addition to electricity, where energy rates are charged in blocks of energy consumed. For example, if you’re on a block tariff for electricity you might be charged 36c/kWh for the first 10kWh used per day, then 33c/kWh for the next 12kWh, and 29c/kWh for the remaining daily usage.|
|Time-of-use tariff||Energy rates that change depending on the time of day. Energy rates are usually higher during peak periods when there’s more demand on the grid, such as weekday evenings when everyone is home from work, and lower during off-peak periods such as overnight and on the weekend. If you’re often out during evening hours, or run a lot of appliances overnight or on weekends, this might be a good tariff choice.|
|Demand tariff||Plans with demand tariffs come with the usual usage and supply rates, but come with additional demand charges on top. Demand tariffs measure how intensely you use electricity and will cost you more if you are using a lot of electricity at once. Demand charges can be applied differently, depending on your retailer.|
|Controlled load 1 & 2||A controlled load is a tariff that applies to a single appliance such as an electric hot water heater or underfloor heating, which usually run during off-peak times. These appliances are on a separate meter, and have lower rates for off-peak hours.|
Switch your electricity and gas provider
Unless you’re moving house or actually want to disconnect the energy supply from your current address, you probably won’t need to get in contact with your current energy provider. In Australia, you just need to sign up to your new provider and they’ll make the switch for you.
Most providers allow you to sign up online, and over the phone. When you sign up, you’ll need to provide your personal details, and a valid form of identification to make sure you’re eligible for the energy plan you want. These days, almost all energy providers run a credit check to make sure you’re eligible but unless your credit score is particularly low, it probably won’t prevent you from signing up.
It should be noted that all energy customers are entitled to be on the standing energy offer, which means not passing a credit check won’t keep you from getting energy supplied to your home, it just means you might not get access to the best deals and discounts.
Once you’ve made the switch to your new energy provider online or over the phone, it could take up to three months to actually start getting billed by your new provider. You’ll only be switched once your previous energy retailer takes a final meter reading (usually done every three months, but a special reading can be requested earlier) and sends you your final bill.
Cooling off period
The cooling off period is the 10-business-day period after signing up to a new energy provider and receiving your plan agreement, where you can still back out of the new service and continue to have energy provided to you by your previous retailer. All new energy customers are entitled to a 10-day cooling off period, which starts when your new provider sends you your agreement information or you sign the contract.
During these 10 business days, your old energy provider might get in touch with you to try and win you back, with new and better discounts or benefits. You can always cancel your new contract within these 10 business days without penalty, and go back to your old provider if they offer you a better deal.
Moving house and switching providers
If you’re just switching energy retailers, you probably won't need to get in touch with your previous provider. However, if you’re moving house you will need to call to arrange a disconnection with your previous provider at your old residence, as well as arrange the reconnection with your new provider at your new residence.
Disconnections and reconnections often come with fees which are set by the energy distributor, not your provider.